16 November 2016

Merger of Rail Budget With Union Budget

The Government has decided to merge Rail Budget with the Union Budget from budget year 2017-18. The merger of Railway Budget with General Budget is based on the recommendations of the Committee headed by Shri Bibek Debroy, Member, NITI Aayog and a separate paper on ‘Dispensing with the Railway Budget’ by Shri Bibek Debroy along with Shri Kishore Desai. A Committee with representatives from Ministry of Finance and Ministry of Railways examined the issues involved and worked out the procedural details.
The salient features of merger and the benefits likely to accrue therefrom are broadly given below:
i. Ministry of Railways will continue to function as a departmentally run commercial undertaking;
ii. A separate Statement of Budget Estimates and Demand for Grant will be created for Railways;
iii. A single Appropriation Bill, including the estimates of Railways, will be prepared and presented by Ministry of Finance to Parliament and all legislative work connected therewith will be handled by Ministry of Finance;
iv. Railways will get exemption from payment of dividend to General Revenues and its Capital-at-charge would stand wiped off;
v. Ministry of Finance will provide Gross Budgetary Support to Ministry of Railways towards meeting part of its capital expenditure;
vi. Railways may continue to raise resources from market through Extra-Budgetary Resources as at present to finance its capital expenditure;
vii. The presentation of a unified budget will help present a holistic picture of the financial position of the Government;
viii. Merger of Rail Budget with Union Budget would facilitate multimodal transport planning between highways, railways and inland waterways; and
ix. It will allow Ministry of Finance greater elbow-room at the time of mid-year review for better allocation of resources, etc.

The budgetary support allocated to Railways by the General Exchequer and dividend paid by the Railways to the Government is given below:

Year

Budgetary

Support

(` in crore)

Dividend and

interest paid

2011-12

20013.44

5784.28

2012-13

24131.90

5466.50

2013-14

27072.40

8008.67

2014-15

30121.16

9173.55

2015-16 (Prov.)

35007.87

8722.51

The Capital at charge of the Railways on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 while Ministry of Railways continue to get Gross Budgetary support for capital expenditure. This will save Railways from the liability of payment of approximately ` 10,000 crore as annual dividend to the Government of India which after adjusting the subsidy in payment of dividend would give a net benefit of about ` 5000 crore to the Railways.

This Press Release is based on the information given by the Minister of State for Railways Shri Rajen Gohain in a written reply to a question in Lok Sabha on 16 November 2016, Wednesday.